“Regulators in Colorado, Wisconsin and Virginia have issued bulletins to dealers or sent letters to TrueCar concluding that legal problems exist with TrueCar’s business model of charging dealers for leads that turn into a sale. And dealer associations in three more states — California, Kansas and Ohio — say members who use TrueCar may be violating state law.”

This looks like an opening volley of an all-out war. TrueCar said that it has been contacted by regulators in six states: Colorado, Louisiana, Nebraska, Kansas, Virginia and Wisconsin.

What seems to be at issue here is that TrueCar dealers collide with state laws governing advertising and so-called bird-dogging, or paying a third party a fee that is contingent on a sale, as state regulators and associations claim. Dealers could have to pay hefty penalties, and TrueCar’s business model would be destroyed.

The Internet changed the way we shop for cars, and the bird dogging fees pay for it. Buying services other than TrueCar can and will be next if this matter gains traction. Countless blogs that feed buying services with customers (TTAC does not) could find themselves out of money. Writers who whip up quickie “car reviews” could be looking for new work. Customers who seek price transparency may have to look harder.

77 Comments on “TrueCar’s Troubles Could Change The Way We Shop For Cars: Back To The Past...”

The whole dealership scheme needs to be reworked from the ground up. I don’t understand why I should have to pay a different price than a better looking guy, or a guy with a slicker tongue than I’ve got. And I don’t understand why a woman should have to pay more just because she came with different standard equipment than I’ve got.

If I have to pay more because I didn’t put in the time to shop around, I don’t see that as being any different than other industries. But I shouldn’t be punished or rewarded simply because I can talk a better game. I’m sorry, that’s just crap, and it needs to end.

Being punished or rewarded based on how well you present yourself and negotiate–that’s a factor in pretty much everything in life that matters. Who you marry, who your friends are, what job you get, how well you do in it. The impact on how much you pay to buy a car is very, very minor in comparison.

As for TrueCar’s legal troubles: I learned years ago when considering ways that TrueDelta could branch out that many state’s have laws against “bird dogging.” In these states you can get a commission for a lead, but NOT for a sale. If I learned this in less than an hour of research, then certainly TrueCar was equally aware of these laws.

I’ve been wondering how they were circumventing them. Apparently they’ve only been choosing to ignore them. That’s not going to work. I do not know what happens if you violate these laws–are there fines?–but TrueCar’s probably going to find out, the hard way.

I understand the power that luck and the big Random Number Generator in the Sky holds over our lives, but that doesn’t mean I have to like it. Interviews for jobs have a purpose beyond simply determining whether a person is capable of doing the work, since any number of people could do any number of available jobs at any given time.

Car buying, just like buying anything else, need not be based on the ability of the buyer. If I’m buying a quart of milk, I might check a few different stores to see where I can get the best price for the type of milk I want. I’m not going to play stores off of one another until I get one of them to give me the milk for a penny or two more than they paid for it. The notion is ridiculous. If that’s too small-time for you, how about buying a computer or a dishwasher or a couch?

That we don’t buy cars the same way we buy literally everything else that we buy from a store does not make sense to me.

(Note that I’m leaving out residential real estate, since that’s almost always bought from another person through one or more agents, not from a store.)

Huh? Are you negotiating an offer or the pay? If I walk into a CEO’s interview without appropriate qualification, are you saying I can negotiate an offer and it’s simply up to me? Same goes with dating a supermodel.

You can also say that the price of a TV is negotiable. Perhaps. Is the kid at Best Buy screwing me on financing, a trade-in, or because he drew squares on a sheet of paper? We both know the answer.

They probably weren’t ignoring them. They probably looked up the laws in their state and didn’t see any problems and made the assumption that this holds true for all states.

And after they became larger, no one probably checked it again. I’m a big automotive junkie and I never heard of a bird dog law. I’ve also been involved in sales and some other businesses where this type of law could have affected me.

While I understand ignorance of the law doesn’t protect you from it, many laws (like these) become more intrusive to business than they help.

I like Truecar’s model and I suspect that in most states it will remain. What will probably happen is that they will block or not provide information to the states with bird dog laws. Maybe enough people will learn of this and hopefully the laws will change.

“If that’s too small-time for you, how about buying a computer or a dishwasher or a couch?”

Those items can ALL be negotiated in most cases. While there are some mass merchants that won’t negotiate (Wal-Mart, Amazon etc), most all other merchants will negotiate. Sometimes they call it “price matching” or something like that, but it’s all the same process. You want to pay less, put in some effort.

The chance of removing the negotiating aspect from any high-ticket sales transaction is just about zero. And yes, some people are good at negotiating, others aren’t. You can either try to make yourself a better negotiator or bring someone with you who is better versed in that skill ((just FYI, women are generally better at negotiating then men).

Yep. Just looking around my own house, I can see numerous things that I have negotiated, such as home theater and stereo equipment, appliances, men suits, camera equipment, musical instruments, furniture, etc. And all sorts of other things that wouldn’t ordinarily be negotiable can be haggled if buying in volume.

You can either try to make yourself a better negotiator or bring someone with you who is better versed in that skill

One thing is for certain — whining about the system won’t help.

A great book on the subject is Herb Cohen’s You Can Negotiate Anything. A breezy read, and much more useful than most of the academic books that cover the topic.

I agree. In fact, just the other day I went Wal Mart to buy a twenty four pack of diet soda and noticed that they were out. I asked a manager if I could get two twelve packs for the twenty four pack price and he said sure. Not the best example but it illustrates that you can negotiate the price on almost anything.

I’m not sure what to say here. On one hand, it rarely hurts to ask for something extra. On the other hand, I can’t help but wonder why you thought you were entitled to something they weren’t offering their other customers.

On the other hand, I can’t help but wonder why you thought you were entitled to something they weren’t offering their other customers.

It’s not a matter of “entitlement”. It’s a matter of seeing an opportunity to cut a deal, and taking it.

He was making a $100 purchase in a store in which a typical purchase is perhaps $4-5. That disparity is a big hint that there was room for negotiation.

We also know that the cost of materials that go into a $3-4 latte is extremely low — probably pennies at most — so the store has room to give away a coffee without worrying about the expense. They’re making decent margin on the $100 deal, so throwing in a food item that perhaps cost them $1 (that’s a guess) isn’t such a stretch, either.

Instead of being so concerned about what others pay and stewing with jealously, learn how to play the game. I’m sure as hell am not going to change for your sake, and complaining about it isn’t going to save you a penny.

He was making a $100 purchase for goods valued at $100. That is not materially different from me making a $5 purchase for goods valued at $5. The only difference is that he felt entitled to ask for extras because …well, who knows why, really.

But somehow, with car buying, not only is this behavior expected, it’s built into the price! It’s not like I’ve never asked for and received throw-ins on a car deal. I just don’t particularly enjoy it, it feels like a giant waste of time since we all know what the outcome is going to be anyway as soon as I step through the door, and I think the whole process is just one big intentionally obfuscated mess designed to wring as much as possible out of the customer at every step along the well-beaten path.

The question is, why don’t dealers just save everyone their (literally!) valuable time, post the lowest price they’re willing to accept, and let everyone move on with their lives? Just think of the reputation they’d gain as a customer-friendly place to buy!

The question is, why don’t dealers just save everyone their (literally!) valuable time, post the lowest price they’re willing to accept, and let everyone move on with their lives?

Because a one-price model isn’t effective when the product is expensive and when customers have wide ranges of tolerance for what they will pay.

Chances are that you would pay more than I would, and they don’t want to lose either my business or yours. Giving the skinny price to everyone would force them out of business — they can’t afford to give those low margins to every customer — while offering the Justin price to everyone would make people like me shop elsewhere.

Nonsense. The end result of a truly free market is noone controlling any more than they can protect at any given time. Which gets a bit tiresome, hence aliances form. But absent external coercion, history has shown very few stable aliances much larger than extended kinship groups.

Which is why the Afghan style tribal models has outlived pretty much any and all larger “empires”, from Rome to Rule Britannia, and will outlive our own, as well.

The interesting problem, is figuring out how to make transacting between these small autonomous groups less costly, so that people can enjoy the resiliency they provide, without having to endure the crushing poverty that goes along with the limited specialization available to those only transacting with groups a few hundred in size. Pretending tampering with our own corrupt, legalistic, barren, infertile, progressive dystopian models are somehow the solution to any more than can kicking, is utter folly.

But, I’ve accepted the fact that more and more people negotiate on appliances, electronics, clothes, etc. etc.

One price car selling has been tried, and largely failed. We’ve always had to haggle on cars, so people simply are not going to accept a red tag on the mirror as the final word on price.

Increasingly we won’t accept this on other consumer transactions either. Eventually we’ll be like my wife’s native land (in SE Asia) – want a cup of coffee? Negotiate the price. Want an orange? Negotiate the price. Want a T-shirt? Negotiate. Want to spend your time on something other than dickering on prices? Too bad.

This does not bode well for car salesmen. Right now they are generally slightly better negotiators than the average buyer. That won’t be true much longer. Even now most deals are skinny. In the near future, all deals will be mini-deals.

As an aside, I’ve joined the negotiators. Bought a flat panel TV at target. I asked for 10% off because it was a display model. Asked for another 10% off because it was a discontinued model. Asked for another 10% because the stand (which I didn’t want to use) was missing. This is just the way things are going to be.

The only one price model I can think of was Saturn which did fail, though not so much because of the no haggle model…people generally liked dealing with Saturn dealers, just not dealing with Saturn cars.

I don’t think flat price selling is necessarily failed though, like mkirk said most people actually liked the Saturn dealership experience and I think similarly Scion sales have fallen over the years due to an aging product line and not so much because of non-negotiable pricing.

CarMax still does the one price model – although for used cars. TTAC ran a couple of posts about CarMax a while back. The general consensus is that the set price is at the high end of the negotiating window and that customers will pay more for the convenience of one price shopping than if they negotiated smartly. I bought our ’08 Hyundai from CarMax in Albuquerque in ’09. It was a convenient and pleasant shopping experience with sales associates dressed in their blue golf shirts and khaki trousers – sort of Office Max attire. They’re not paid on commission so there was no high pressure to buy. The facility was clean and professionally run. My wife and daughter felt comfortable there and didn’t feel like we were getting screwed. I never told them we were paying more for that business model than if we simply went to the typical (sleazy) car lot and haggled with a car salesman.

Justin, life unfortunately isn’t this simple. I owned a retail jewelry store years ago. We did repairs for our clients as well, even on jewelry they didn’t purchase from us (of course we charged them money). I would ask my clients where they got the jewelry and how much they paid. It’s amazing to see the price discrepancies for an item – for instance, a 1 ct round brilliant cut diamond solitaire H color, SI1 clarity, well made (generically speaking) can cost anywhere between $4K and $9K, depending on where you buy it. I think this is outrageous, but it is reality. So when someone has a 2012 Honda Civic LX sedan that is $800 less using this Truecar thing, is the price difference really that much. Add to the equation that Truecar burned me with 6 hours of my valuable time wasted and when all was said and done, I would be charged $300, just because I went on their web site and asked for a price quote?

I guess my point is that we as consumers need to do some research before buying a large ticket item. I also believe that we get so caught up in trying to get the best price that we short change ourselves. What I mean is that our time has value and as I look back on my Truecar experience, I invested over 6 hours to find out that there is no savings of thousands of dollars. No magic bullet exists. If, however I decided to do zero research and let the dealers push me around, then maybe it could’ve been a savings of $1000 or so. But if I purchased with such a haphazard manner, I deserve to be taken advantage of, right?

There’s no parallel here. You would have given your customers a better deal than other stores. Great! That’s competition, and not at all the same thing as two people walking into your store at the same time, buying the same piece of merchandise, and walking out with a different price on the receipt. Would you do that to your customers?

Dealer associations will fight this any way they can. The TrueCar business model amounts to being a broker to a multitude of buyers that otherwise would not all have been able to extract such a low price from a dealer. Dealers on the fact that some buyers will pay more than other and TrueCar would undermine that, and possibly worse, make car makers think twice about why they even need dealerships. Let the fight begin.

I didn’t realize that TrueCar was paid by the sale. Couldn’t they just change their model to be paid by the lead or with a flat monthly fee?

For ha ha’s I went on there to check the prices on Hyundais. Accents were going for full MSRP, Elantras and Tucsons for a couple hundred off, and bigger discounts on the Sonata and Santa Fe. Interestingly, the 2 quotes on the Santa Fe GLS AWD were $2000 different!! Kind of a big difference for 2 dealers within 30 miles of me. Makes me wonder what the higher priced dealer is smoking, but also makes me wonder what game the lower price dealer is playing.

When I bought my Honda in 2007, many Honda dealers were using websites standardized by Honda. They had a ‘request for quote’ feature. When combined with Honda’s practice of minimal factory options, it was easy to have dealers bid for my business while comparing apples to apples. They even had a text box that allowed me to specify that I wanted an on-the-road price incorporating all dealer fees, mandatory dealer options, state fees, and taxes. Not every dealer responded to my inquiries. No Mazda dealers did, even though they had the same web platform. Still, I received a variety of bids from Virginia Honda dealers. They varied by more than 10%.

dwford, I tried to buy a 2012 Honda Civic LX for my daughter last month using Truecar. The price of the top two dealers was very low, compared to the third, which made me ask the same question you are. After wasting over 6 hours and two long trips, I found out the hard way. Truecar prices that are way below the others are a bait and switch scam. They promised a price for a car (I printed the papers), yet they don’t have the car. They will, however sell you a higher priced model and the salesmen don’t listen to what you say. I asked for a Civic, I told them that was the only car I wanted, I told them it was for my daughter and they still tried to sell me a Honda Accord. I sent a nasty letter to Truecar and they replied back with a basic form letter.

I also did some research and found out that the guy who started Truecar is the same that did Carsdirect.com I nearly got into a fistfight with the Carsdirect guy when I was purchasing my Mercedes. Another bunch of liars and bait and switch marketing.

This sounds shady. However, is it TrueCar’s fault that a dealership says they have a car when they don’t? Unless they send agents around to all the dealership to check on stock, I’m not sure how they’d know any better.

In which state would it be easiest to crater car dealer protection laws? Kind of like Wyoming and the 55 mph speed limit, are there any states where enforcement and/or fines are so weak or dealer requirements so lax that selling custom order cars without a real dealership could get a foothold?

The problem seems to stem from the dealers having to pay TrueCar a fee in exchange for minimizing their net profits. Its good for the customer in the short term. Its great for TrueCar, leading to nine figure sums moving around. It pounds the dealers though, and probably isn’t a sustainable situation no matter who wins the court fights.

I have to wonder whether these bird-dogging laws also apply to customer referral fees. I just bought a new TDI wagon, and as a follow-up the salesman sent me an email stating: “if you know of a friend or family member who may be interested […], please let me know, as there is a $100 referral fee for every purchase.”

I don’t know the specific laws in Georgia, but if what TrueCar is doing is illegal, then this should be as well. I didn’t think a thing of it – it’s just like incentives from the phone, cable, and satellite TV companies for broadband and video customers. How common are these types of things where the heat is being applied to TrueCar?

Bird-dog regulations vary by state (there are no Fed regulations AFAIK) so it really depends on what state you are in. Based on your description, most states that have bird-dog laws would consider you to be an unlicensed broker if you participate in the $100 referral process. Personally I think these are really arcane laws for the most part, and helpful to neither the buyer or seller.

I would suspect that the legal problem may be that TrueCar is behaving like a dealer, even though (a) it doesn’t have a license to sell cars and (b) it holds no inventory. The first issue is sort of obvious; the second one could support the argument that TrueCar is running a bait-and-switch operation, since it can’t guarantee delivery.

I would think that the legally acceptable solution would be for TrueCar to be paid directly by the buyer. But from a business standpoint, that’s not a great option for TrueCar; even if buyers end up paying less or the same that they would have otherwise. Many of those won’t want to think that the money is coming out of their pockets (even though they are already paying TrueCar’s fee indirectly as is.)

It’s surprising that TrueCar didn’t have a lawyer telling them this already. Perhaps they have a nice fat litigation budget, and a Plan B for when they lose (because they will.)

…..’money coming out of their pockets’…..I wonder how many internet buyers attempt to renege on the deals when the light bulb comes on and they realize they could buy cheaper WITHOUT the TrueCar middleman. The only reason most dealers use their service is to poach deals off competitors outside their territory. Even basic negotiating skills can usually equal or better the price in person…..at least in areas that have more than a couple of stores to choose from.

I found out the hard way. I went to a local dealer to buy my new car. I negotiated and got a price that was $500 below the MSRP price. A co-worker told me about Truecar, so I signed up. I got the runaround at a couple dealerships (bait and switch) and wound up going back to the original dealer. I told them about the fiasco with Truecar and they told me that they are on the program. When they ran my information, they found out that if they sold me a car, they would have to pay the Truecar marketing fee of $300, which they passed on to me. So, now my price just went up $300, because I contacted Truecar.

Turning a skeptical eye toward your situation, are you sure that wasn’t just the dealership trying to squeeze $300 more out of you and using TrueCar as an excuse? After all, you *did* tell them you had used it, right? It wasn’t as if you’d withheld that information and they sprung it on you. Considering you didn’t walk in there with a TrueCar voucher, I’m not sure how they would have been charged for your sale.

Dealers are worried that they’ll have to actually justify the value they add in a car buying transaction in order to maintain their margins. If state laws protect an antiquated business practice that inhibits transparency to consumers in a commercial transaction, then it truly is a sad statement on the laws of this country.

“antiquated business practice..?” Huh? This is not 1960. GM does not own 50% of the market; Ford 25%.
MSRP is the best ‘business practice.’ The OEMs spend millions taking the temperature of the market and price their vehicles accordingly. If you don’t want to pay $14,995 for a Cruze, then buy a Focus, or a Civic. MSRP is fair and equitable.
Which came first – the chicken or the egg? Did a salesperson hurl out a discount to turn around a prospect walking out of the show room, or did a client demand a discount or they were ‘walking.’
People whine and whinge that they want ‘fairness,’ but really what they want is to be made feel ‘special.’ They do not want to pay what everyone else pays, they want a ‘deal.’
The art of ‘the deal’ is to convince someone who really doesn’t know what is happening THAT DAY in the industry/state/county/city/marketing district that the deal on the table is the best one in recorded history.
As to ‘antiquated business models:’ I would not want to spend $40k on a vehicle without driving one very similar to it first. Just whose gas, inventory and insurance is going to pay for that? And you can have all the websites in the world – sometimes just having a friend in the dealership can steer you toward (or away from!) a vehicle. Everybody wants to buy online, but wants to kick tires/test drive at the dealership. Cake and eat it, too?
Not all dealerships are crooks, nor salespeople. It never ceases to amaze me how much time people on websites spend worrying about getting ‘ripped off’ by $100 or even $500! Life is too short. Five years ago, my plasma TV cost me $2,400: I could buy a better one today for $800. Am I going to lose sleep over it?
I am so glad I saw the writing on the wall and got out of the ‘biz three years ago. My life is far less stressful.
And you know what, when it is time to get rid of my current ride, I won’t bother with a single one of these criminal invoice selling services or re-marketers, or whatever the heck they dress themselves up as. I will get 2 or 3 quotes from authorized dealers, in person, then make my decision – and move on, back to my life.

No. I don’t want to feel “special” or feel like I walked away from a dealership getting a *better* deal than the schlub who walked out as I was coming in. I want to know that if I bought the same car that you did that I didn’t pay more than you for it. On no planet does it make sense that the same item should cost different amounts based on who is doing the buying.

You’re going to have to get over the idea that everyone should pay the same for an identical product. It’s not going to happen in the car biz, and increasingly it is not happening in other businesses.

I paid less for my TV at Target than someone else did -for the same model/make TV at Target. If you clip coupons you pay less for the same brand of spaghetti sauce, from the same supermarket, than I did. One of the guys I work with has a cell phone ap that scans UPC codes and tells him if the product is available cheaper with in “X” number of miles – and where. In the future everyone might pay the same for a newspaper (not that newspapers have much of a future) but that’s going to be about it. People have come to realize that every retailer is actually a dealer.

Clipping coupons means nothing to the retailer because that money is reimbursed by the manufacturer, and identical coupons are available to anyone who might go into the store if they bother to look. Not applicable to this situation.

The cell phone app is also not applicable to this situation because in that case you’re comparing one store to another, not one *customer* to another.

That’s the problem here. The issue isn’t that Person A might get a better price than Person B for the same product, but that Person A might get a better price than Person B for the same product at the same store at the same time, without a manufacturer or store coupon that would be available to Person A if he bothered to look. In my mind, that’s walking the line of unfair business practices. In fact, if mechanics charge you more than they charge me for the same work, they can get in big trouble for that. Why not car dealers, too?

The coupons are relevant because if you use them and I don’t (or vice versa) one of us will get something (the same thing) – at the same retailer, at the same time, for less money. It doesn’t matter whether the coupon originates from the retailer (some do) or the manufacturer. You are going to pay one price, and I’m going to pay a different price, for the same thing, at the same store, on the same day, at the same hour, in the same checkout lane.

I’m going to ask for discounts at the car dealer, and negotiate the price down, and if you don’t, then that’s your problem. I don’t see why you think there is something wrong with me paying less than you, for the same car, at the same dealer, if I’m willing to negotiate for 5 hours and you aren’t. ???

Years ago, I owned a very high end jewelry business. At first, we priced everything to a fair price. We knew our competition was overpricing their merchandise by 3X to 7X (yes, this is true). We did a test and marked our jewelry to the competition and send out certificates in the mail and in newspaper ads for $XX + X% discount. Sure enough, our sales skyrocketed. The net price was the same, sometimes even higher than before. What happened is that by pricing our jewelry at fair prices gave the customer the impression that our quality was substandard, even though it was the exact same goods as the deparment store sold, same vendor stock number, etc. When we raised our prices, the impression was that our merchandise was on par with the department stores. When we gave our discounts, our clients believed they were getting better quality merchandise at substantial discounts.

In summary, the behavior of our clients was the cause of us playing the higher price, higher discount game. I believe the same goes for the car business. One thing I think is amazing is that you can buy a car that will run for well over 200,000 miles for under $20,000 (2012 Honda Civic LX sedan) or you can buy a not so well made/engineered car that barely goes over 100,000 miles (Volkswagen Jetta) the cost gets very high to keep this car running. The cost is similar, but you are truly getting a substandard product. I guess that’s why you have so many different choices when buying a car, just like buying jewelry. The sad thing is that the customer doesn’t know the difference between a $20K Honda Civic and a 2012 Volkswagen Jetta, until the car breaks down. Just like a $8K 1 ct diamond solitaire in the mall vs a $8K 1 ct diamond solitaire at my store. That is, until I show you the diamond under a microscope (something I can see without magnification) and you are shocked at how dirty the mall bought diamond is and you are disgusted when I tell you I could’ve got the same ring for you for under $3K.

Most of the people who are afraid of being “ripped off” are buying cars with mark ups of $400 to $800 dollars. With all of the time research shopping traveling haggling etc. The guy who paid msrp only did worse by a few hundred dollars. People forget to put a value on their time.
I sell cars for a living and I see all types of buyers. The buyers who pay for a value are always happy. I suggest you find a good car guy and stick with him.

When I go to buy milk I can go to the warehouse store or Walmart to get a deal or I pay a small premium and get it at 7-11 to save time. I buy good shoes for my Son to play basketball I don’t buy half price crappy ones that might lead to an injury. If you use a little common sense and buy what you can afford buying a car is not hard. Their is too much information online for anyone to get taken. As for truecar they are a glorified middleman who has zero inventory and cannot back up any promise made on their site. They take the information from transactions and use it against the dealers and customers. They charge the dealers $300 per deal. Who do you think pays for that? If it is too good to be true it probably is.

Many of the posts here defending the existing dealership model like to talk about a few things they offer that are “special” —

1. Provide special information – nonsense. People buy TVs, appliances, cameras, air conditioners, etc… that cost nearly the same as or more than a car but don’t need commissioned salesmen to tell them how to read a brochure or test the equipment. Sure, they can shop at a venue with commission but they are not required to do so.

2. Provide some extra “service” and “personal touch” – nonsense. Tickets to the ballgame are nice but come on. The yahoos who talk up the wonderful service dealers provide to their regulars are basically admitting they are milking high margin customers and ignoring the price shoppers. Doesn’t sound like “service” but more like “rip-off”.

3. Car salesmen need to earn a living too – nonsense. So do I and so do people who are overcharged for their “services”.

Other arguments are just as ridiculous –

1. Just pay MSRP – nonsense. The pricing models are designed to confuse the consumer, not allow comparison shopping. Suggesting one just pays MSRP is a slap in the face. All the important information on pricing is hidden from the buyer. Kickbacks, fees, incentives, variable interest rates, trade in values, actual purchase price, etc… Some of these are dangled in front of the buyer but as many other posters have noted, the dealers and automakers just move the other pieces around so the numbers are all fungible. It is made to appears as if the buyers has information. It is a scam. Yes, sellers should be free to price as they see fit but there is a concerted effort to confuse buyers and obfuscate the deal. Suggesting we “just pay MSRP” is the same as saying “shut up and pay or you will get nothing”. Only a car salesman or dealer would suggest such nonsense.

2. Negotiation is a part of buying big ticket items – nonsense. Only homes are the last bastion of FORCED consumer negotiation. All these piddly examples of buying suits by negotiation are ridiculous and miss the point. If I go into a high end suitmaker, I may expect to negotiate, not the Men’s Warehouse. Only with cars and homes are we forced to negotiate and only one of those is a true commodity.

3. Relax! You’ll be much happier if you just play along – nonsense. This is the argument that seriously pisses me off. If you enjoy getting ripped off, this might make sense to you. For most other people, those who despise car dealers, it sounds straight up stupid.

In other words, it is all nonsense. The dealers are just another protected business hiding behind government to justify their anti-consumer practices. Yet, to hear them talk about it, they are true capitalists living the American Dream. Typical. I call BS.

People continually forget that the dealership model is actually a benefit to the consumer by providing price competition. By have several independent businesses close together selling the same product and others selling similar product, consumers can haggle for the best prices. No one makes a customer drive into a dealership and pay full price for a car, yet many do. Consumers sometimes forget that they can just say no, leave, and go on to the next dealership. A one price model would result in higher prices for everyone. Truecar may be illegal in some states, but it is a form of price competition that hold down prices.

In short, [citation needed]. Dealerships compete against the buyer, not against each other. If they competed against each other, individual buyers at the same dealership would always pay the same price. They do not, therefore there is competition with the buyer. QED.

one nit, Mike – in the “new economy”, homes are consumer durable goods (like they used to be) just like washing machines and cars. If left on their own, they will depreciate to dust (an effective zero).

Otherwise, I agree with all you’ve said here.

I’ve bought way too many cars, and I’ve dealt with a range of salespeople (most of them were outright douches, though). My philosophy on car buying is: If you are a good, honest salesperson, I have no problem with leaving money in the deal for the dealer. On the other hand, if you are an arse, I will either walk or needle you for every free dollar the sales manager will let me have (after wasting way too much of your time).

There are lots of variables to buying a car. trade in appraisal,getting a payoff,running credit,arranging for tags,test drives, fuel,insurance,Sate inspection etc. These are all services that must be paid for. It is impossible to compare car buying to anything else. DJ tragic mike you seem to be the type who has it all figured out and no matter what you pay you will never be happy. Sadly for you the experienced salesman are busy with their regular clients and you end up with rookies everywhere you go. In the end you get what you pay for. I have an Ipad it is awesome and expensive. You can buy them directly from Apple no negotiation. The same is not true for a car unless of course you pay msrp.

So I am a bit stupid here after the holiday. Why is this any different from folks like USAA offering a car buying service for their members. Where dealers agree to sell at discounted cost to its members? My cost through USAA is at or about the same as TrueCar’s numbers, and often a bit less.

The car buying service offered to USAA members is simply a re-branded version of TrueCar via zag.com which is owned by TrueCar. So my assumption is that whatever the fate of TrueCar turns out to be, the same will apply to USAA and the other Zag.com clients. Fine print is at http://usaa2.zag.com/main.html?referrer_id=ZUSA200073

The problem here appears to be that dealers are paying TrueCar for a sale. Would it go away if it was the buyer who paid TrueCar? That way, TrueCar would be acting as the buyer’s agent. Taking money from the dealer creates a conflict of interest between TrueCar and the buyer.

You are absolutely correct. Truecar is not there to help us and they sure didn’t help me. I feel that all they cared about was the $300 they collect from the dealer. Needless to say, I think Truecar could not collect from the buyer, so they get it from the seller and the seller must up the price to pay Truecar. If Truecar truly did save me money and make my purchase easier, I would gladly pay them $300, however when I am being charged $300 more than what I was able to negotiate … well, that is just plain wrong. FYI, I did negotiate a price with the local dealership, however I made the mistake (due to a co-worker’s recommendation) to go on Truecar.com to get a better price. When I went back to the dealer to buy, he told me that he must now pay them $300, so the price went up. Some help they are!

I agree with many that the whole dealership model is flawed in the information age we find ourselves in. Dealerships are set up to compete with the customer, not another dealer.

Buying a car should not require waiting for a sales rep (who typically knows less about the vehicle that I do, surprisingly) to go to some guy in a raised off the floor glass office (the sales manager) to play with a set of numbers to negotiate a “deal”.

The price on the car should be the price I pay. Let dealers compete with other dealers, not with customers and put the best window sticker price they will accept.

I don’t have to negotiate a deal for the price of a toaster at Walmart or Sears; they compete on price between them, and I choose. Show me what you have, and I’ll make the choice.

The idea is that no two cars are alike so you can’t really compare. Cars are appliances even at the geek level. This service shows consumers something only execs at the company would know. Likewise, we all know what breaks in a car, something known to service managers only in the past. The info used to be totally asymetrical but now consumers have access to much more. Knowing the average transaction price is a big help in a world where options, packages and “what’s on the lot today” all serve to mess up the consumers attempts at research before dealing with a professional negotiator in a false sales environment

Or, as I have found, Truecar gives prices on cars that the dealer doesn’t have in their posession! I think this is fraudulent advertising at some level, but I did read the Truecar fine print and in so many words, it blames everything on the dealer. Years ago, I used that rotten Carsdirect.com website and had the same bait and switch occur. I also found out that this Scott Painter guy is the same one who did the Carsdirect scam. Someone needs to get this guy out of this crooked advertising business.

And yes, I’m very upset, because I wasted about 6 hours going to two of the Truecar lots and neither had the car they quoted the price to me, but they would gladly upgrade me to another car. When I went back to the local dealership, I was told my price had gone up $300, because I went on Truecar and they had to pay them a marketing fee if I bought the car from them. So thank you Truecar for ruining my chance of getting the car I wanted to buy. I’d rather deal with the salesmen at the dealership than one of these internet sites.

I was going to compare this to Napster vs. the RIAA, along with subsequent P2P file-sharing websites, but maybe not. This just has the appearance of someone not getting paid, or not getting paid enough in someone’s eyes, as it always seems to boil down to.

Does this mean TrueCar’s numbers are inaccurate as well?

As far as online price requesting, the Honda dealer where we bought our 2002 CR-V was only willing to negotiate $250.00 under MSRP. Their internet dept. quoted us $500.00 under MSRP! Go figure…

I still wasn’t pleased with the deal, but as the heap is almost 10 years old, it still does very well, my wife loves it and it gets the job done, so I no longer care (as much) what we paid for the thing.

Our 2004 Impala? GM supplier discount, so no negotiating at all and we got a very good deal. Thus far, at almost 8 years old, it is doing remarkably well, too.

There is another car sales business model that works quite well. I bought two Dodge trucks from the Jeep/Dodge dealer in Jasper, Ga. Their price is set, with no negotiation, but they are transparent about it. The price is a certain amount over their invoice, not MSRP. They say that at the end of the year the manufacturer may give them rebates depending on how many vehicles they sell, so their profit on each vehicle might be more. Dealing with them was great. There were no salesmen, just old, retired guys who went with you on a test drive. When you were ready to buy, you went into an office and they did the paperwork. People used to come from all over the state, and beyond, because the price and experience were good. Maybe you didn’t get the absolute lowest price that anyone anywhere could get, but you knew you got a decent price and it was the same that the other guy walking out got.

And, by the way, if you don’t like the car buying experience, just compare it to the airline ticket buying experience. You might have paid twice what the guy next to you paid for his ticket.

And if you think the natural outcome of the “free market” is not monopolies, I suggest that you do some reading in American history from about 150 years ago. Concentrate on railroads and oil.

I didn’t feel entitled to anything. I would have bought the cards even if they said no.

Here’s how it went down. I approached the counter, and asked for four $25 dollar gift cards. As they were getting them ready I said “Hey can you comp me a small latte, and a banana bread”? They counter person said “Sure I can do that”. Two things to remember. If you don’t ask you don’t get-and don’t be prickish about it.

I find the whole car negotiating process entertaining and enjoyable. I am a car salesman’s worst nightmare. On my last new car purchase I had a salesman get into a semi-shouting match because I tried to haggle them down a little bit too much.

I’ll never use Truecar though. The lowest Truecar price for the vehicle I purchased was much higher than what I paid for my car.

Who’s Getting What Dealer Data?
By Jim Ziegler
WardsAuto.com, Dec 30, 2011 7:59 AM
The original blogs I posted about TrueCar.com have had more than 40,000 page views. This issue of who’s rooting around your data is going viral.

A lot of auto-retailing people are mad that the marketing firm and others like it give consumers all sorts of proprietary pricing information, then sends them to dealers in the form of leads that dealers pay for if they become buyers.

But the real question is whether TrueCar is the disease or a symptom of a greater epidemic sweeping through the dealership world.

I have questions concerning its business model. Is TrueCar a broker? I don’t know. I believe it is in some states, according to law. It should be addressed by qualified government agencies.

However, that’s just a minor distraction from the real issue.

The larger issue that many people sidestep with pious doubletalk about transparency is that TrueCar and dozens of other vendors are siphoning off dealership data with no policemen looking over their shoulder.

What if you discovered some identity thief rooting around your belongings with intent to do you financial harm, maybe ruin your life? Well, I believe a number of vendors who want to bring down the retail automobile business as we know it are using our data as a weapon.

Mr. and Mrs. Dealer, what in the heck are you thinking here? When the consumer lawsuits come, and they will, who is going to be held liable? Not the vendor, but rather, the dealerships that allowed customer-privacy information to be looted out of their computers.

All of the information the government requires you to lock away and keep under strict security in the real physical world is virtually available in your dealership-management system, and you’re allowing people with vaguely defined purposes access to it.

The most sensitive data is the customers’ financial information, which opens up an entire category of liability exposure when vendors access it without safeguards.

I picture the cross-examined dealer in court saying, “But Your Honor, they promised they weren’t going to do anything with all of that customer information I gave them.”

That is true; they do promise not to misuse customer data. But why do they need it, and who else are they sharing it with?

I am not talking just about TrueCar, but also about every vendor given access to dealership data.

I have read dozens of agreements dealers are signing with vendors. They all contain similar language that is chilling, to me anyway. It is along these lines:

“We reserve the right to use macro-level, aggregated data to evaluate performance and best practices with the primary objective of better understanding customer behavior, pricing trends and other statistical insights that may lead to an improved implementation.”

Macro-level aggregated data? Almost every one of them has that language. These vendors are taking 39 fields (or more) of customer identifiable information out of your computers. And they reserve the right in their contracts to share this information with “affiliates.”

Not only are you giving up the data, you also are signing off on allowing them to pass it on.

So if one affiliate partner has access to sales data that personally identifies consumers, and another affiliate has access to financial-transaction data, could they theoretically combine these ingredients and bake a tiered cake?

I am a modern Paul Revere trying to wake up the countryside. Where are our dealer associations on these issues of endangerment?

And most dealers have stupidly – yes, I said stupidly – allowed vendors unlimited information access instead of specific information for specified purposes. You didn’t take the time to scrutinize why they needed so much information that has literally nothing to do with their stated purpose. Wake up!

Auto makers need to get off the sidelines and take a stand to preserve the value of their products.

A full vetting of vendors by an independent body is necessary. It’s time to re-examine who is getting what. Keep those calls and emails coming.

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues. He can be reached at zieglerss@aol.com.

I don’t get what the big deal is, really. Why SHOULDN’T I get the better price if I am the one who asks for it? If go to buy a MINI Cooper and I say I will pay $21k and someone else wants the same model and settles on $22k, why should that be wrong or illegal or unethical? I did the work, I told them what I would pay, and YES, if I don’t like it, then I walk away. It’s really the same across all lines. If I’m not happy with the $60 fleece at J Crew, and they won’t give it to me for less, I simply pay the $60 or leave without the shirt. Why is that so wrong?

It comes down to comfort levels. Many people are simply afraid to ask for what they want, in car buying and everything else in life. But in no way should I be forced to pay the same price as an uneducated or lazy consumer.

This discussion is about a concept that economists call “consumer surplus.” Here’s a link to the wikipedia article that explains it quite well.

http://en.wikipedia.org/wiki/Economic_surplus

What car dealers are attempting to do is acquire some of that consumer surplus for themselves, nothing more, nothing less. Sellers have been striving to do this since the dawn of commerce–it’s best to accept that the practice will continue.

The only shady business practices I see here are the dealerships looking to preserve their own advantages. Heaven forbid the customer be able to compare price, selection, and service in short order from the comfort of their home, instead of subjecting himself to smoke, mirrors, and outright fabrications in the boiler room that is the showroom floor.

I walk onto a Nissan lot to check out the Juke. Salesman’s on the spot. Within 10 minutes, we’re test driving. 45 minutes later, the sales manager is laying it on thick about Japanese tsunamis, plant closures, and how there’s no way to remove the marked-up-200% lug nuts, pin striping, and paint treatment.

I hop on TrueCar, find three dealers in the area with similar models, priced anywhere from $500-$2000 less. A couple emails later, one’s tried to bait-and-switch me, another’s unable to get the exact model I want, and a third tells me he’ll give me what I want for my worn-out, 99 Isuzu Amigo trade, has someone making a trade for the exact unit I want, and will contact me the minute he’s got it on the lot.

Three days later, we’re driving away in the Juke we originally test drove (yeah, where they fed us all the high pressure BS) for nearly two grand less, less than 90 minutes after pulling onto the lot in our trade.

That’s why the dealerships are looking to take out TrueCar, IMHO. Barring specific, actionable information like TrueCar offers, dealerships can grind people down, feeding them BS and lies, knowing they are unlikely to walk off the lot and risk enduring the same predatory tactics elsewhere.

I tried to use Truecar to buy a 2012 Honda Civic LX sedan last month. They had some great prices, a graph with a very nice bell shaped curve showing how I would get the best price and the people were so friendly … until I got to the car lot. They told me that they had the car I wanted in the color I wanted about an hour earlier on the phone, however the car wasn’t there. The dealer claims they just sold it, but they had another one in a similar color. No big deal to me, so we go look for that car and they can’t find it. In fact, they couldn’t find one Honda Civic LX on their lot. What they could find was a 2012 Honda Accord LX that they would sell to me at a similar discount. Me: I don’t want an Accord, I want a Civic! Them: The Accord is a much nicer car. Me: I came here for the Civic that you told me you have. Them: Wait here while I get the keys to this car. etc! I wasted an hour drive for this garbage!

So I go to Truecar dealership #2 (about 200 higher price). I called first and told them how upset I was with the first Truecar dealer. They told me that they don’t do business that way and that I should come in. I drove over 2 hours in traffic and after a few minutes of chit chat, they ask me what car I want to buy. I told them I had just called. They tell me that the saleman I spoke to just went home but he could help me. I tell him the car I want and the Truecar price (I gave him the printout). This guy actually snickered at me! I became very irate and told him I just drove 2 hours and I want to buy my new car. He calmed me down and had me sit in one of the offices while he went to look for the car. Again, they couldn’t find the car! Again, they couldn’t even find a 2012 Honda Civic LX. Again, I was told how great the Honda Accord is and that I should treat myself to a better car. I left very disappointed and I wrote Truecar a very nasty message.

Prior to using Truecar, I had gone to the dealership here in Valencia to go for a test drive. They tried to get me to buy my car that day and started out very high, but when I finally had enough of their games, I headed for the door and they stopped me and gave me a $500 discount off the MSRP price. I understand that it’s all part of the game with them and I almost bought, but I decided to sleep on it. At work, a co-worker showed me Truecar and told me that he heard that they could save thousands of dollars. We went on the website and the price quotes were hundreds, not thousands less, but he convinced me to try it, so off we went after work. After the Truecar fiasco, I went back to Valencia and spoke to the saleman. I told him about my ordeal and he told me that they probably never had the car. His manager checked the computer and sure enough, they didn’t even have the car, neither dealership did. The funny thing is that the dealership did have one or two Honda Civic LX sedans in other colors, the ones they claimed they couldn’t find. The Valencia salesman said that they didn’t want to sell that car to me at that price, since they were losing money. The saleman showed me an invoice sheet for the car I was going to buy. Somehow the invoice cost at Valencia is different from the Truecar. Unfortunately for me, I was told that because I had requested a price from Truecar, Valencia had to pay $300 and so the only discount I could get would be $200 off the MSRP.

To summarize, Truecar not only wasted hours of my time, but they cost me $300 and I never did buy my new car. I blame them for their shady business and I should have known that something too good to be true typically is. The numbers that Truecar puts on their charts don’t make sense and when I asked a friend of mine who works at a Lexus dealership, he told me that the information is not correct. He gave me an example of a car that they just started selling that month and Truecar says they have sold hundreds of them. My friend told me that not even 100 were shipped to the dealerships yet, so how could they have sold that many? He also said that Truecar tells you they will sell a car that you can’t find at any dealership, yet somehow they claim that those cars were sold. To me, Truecar is just another bait and switch program. I highly recommend anyone who is thinking of using them to avoid them at all costs. I watched a video on U-tube about Truecar and in reality it is adding a middle man to the process, just like it did for me and someone has to pay for this, again me.

This is the 7th post you’ve made, saying the same things, and while I’m convinced that your buying experience was ridiculously bad, I still am not convinced it had anything to do with TrueCar. You used TrueCar to find the car and then spoke to the dealership, who proceeded to tell you lies about their inventory. You blame the dealership’s lies on TrueCar WHY exactly? I see no connection here other than the fact that you started your search with TrueCar. And like I said in reply to another comment of yours, I suspect that the extra $300 is because you mentioned TrueCar and the dealership decided to turn that into an excuse to wring more money out of you.

This is like blaming Google when a site you find in a web search gives you a virus in a file the site claims to be legit. I feel for your wasted time and reduced discount, but honestly I fault the dealerships for about 99% of the problem here. TrueCar gets the other 1% for not being able to control whether the dealerships tell you (and them!) the truth.

Hi Folks thank in advance for allowing my comments based on these discussions about True Car and the the pricing/negotiating practices with dealerships both domestic & import.

Briefly my automotive background comes from being a National Commercial/Fleet manager for a top 100 Ford dealer in the Southeast.
My selling experiences have been different based on some of the feedback given on the retail level of the industry which I can understand to be frustrating. As you may or may not be aware of dealerships spend thousands monthly to implement sales training processes designed to maximize gross on the consumers coming in to shop. Please don’t get me wrong, profit is not a dirty word but the tactics need revising in this age of internet shopping and information.

I have advocated for the full disclosure process which dealers seem afraid to offer so some have opted for the “one price” structure which I think would be the right option for @JustinM since whether you are a seasoned shopper or not you leave that dealer paying the same price as everyone else not based on looks or skill.

Dealers have taken to the True Car concept because it offers the most reasonable way to get leads(customers) without paying for leads upfront which most are boggas (bad phone #’s, fake names etc.) it is a performance based concept which is attractive compared to the outrageous advertising costs of T.V, radio and newspaper. Believe it or not True Car actually allows the dealers to offer more aggressive pricing because the hard cost to the sale is far less than tradional means mentioned… Are you going to be pissed off at the radio station because the dealer advertised their product with them… Who do you think is ultimately paying for those ads? I think the misuse of consumer information is a legit concern and proprietary dealer info should not shared with anyone other than the Manufacturer for statical purposes.

I am starting a internet consumer shopping service that I believe is revolutionary because we do not advertise or promote prices that produce results like @Trying to buy experienced with the switch and bait. Using my Fleet experience for each consumer Auto Club USA anonomously bids the desired vehicle out to several regional dealers and we pass that information on to the consumer to see what the dealer has in stock and the pricing they are willing to sell the vehicle. This gives the consumer real time inventory choices and pricing which can be affected based on many factors (dealer contests & incentives, time of month quota’s, surplus inventory on a particular model etc.). After the consumer has had the opportunity to review the different proposals offered, Auto Club USA then will schedule a private test drive/product demonstration preferably at the consumers home or office (depending on distance from the dealer) unlike True Car which in so many ways dictates what the dealers should sell their vehicles for, we do not influence or direct the dealers on pricing we allow the bid process to work for itself…fair and square.

In my option referrals are a great means of keeping fixed costs down for businesses and usually if a person is referred to something they are more relaxed and confident about the product and the service they will receive.

My experience with TrueCar is that it just gives dealers an opportunity to do a bait and switch. You get a price from TrueCar, print out a certificate from participating dealers, and sometimes get direct phone calls from those dealers. You confirm with the dealer that they have the exact car your looking for and they say “Sure, bring in the certificate”. You get to the dealer and they say sorry, we do not have that basic model, but we have this other one with the premium package, and blah, blah, blah, for 10k more. We had one dealer when pressed to explain why they told us they had our car when they don’t, say “we sold it last night.”